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Municipal Labor Demand in the Presence of Uncertainty: An Econometric Approach

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  • Holtz-Eakin, Douglas
  • Rosen, Harvey S

Abstract

The authors specify a model of municipal labor demand when resource flows available to the municipality are uncertain. The model allows them to test the hypothesis that employment decisions are rational in the sense that they incorporate all available information at the time that the decisions are made. The authors find that, for their sample of communities, on the whole one cannot reject the hypothesis that labor demand is consistent with intertemporal utility maximization under uncertainty. However, small and large communities exhibit different behavior. The employment decisions of small communities are consistent with the model, while those of large communities are not. Copyright 1991 by University of Chicago Press.

Suggested Citation

  • Holtz-Eakin, Douglas & Rosen, Harvey S, 1991. "Municipal Labor Demand in the Presence of Uncertainty: An Econometric Approach," Journal of Labor Economics, University of Chicago Press, vol. 9(3), pages 276-293, July.
  • Handle: RePEc:ucp:jlabec:v:9:y:1991:i:3:p:276-93
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    6. Holtz-Eakin, Douglas & Newey, Whitney & Rosen, Harvey S, 1989. "The Revenues-Expenditures Nexus: Evidence from Local Government Data," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 30(2), pages 415-429, May.
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    Cited by:

    1. Lundgren, Tommy & Sjostrom, Magnus, 2001. "A flexible specification of adjustment costs in dynamic factor demand models," Economics Letters, Elsevier, vol. 72(2), pages 145-150, August.
    2. Dahlberg, M. & Jacob, J., 2000. "Sluggishness, Endogeneity and the Demand for Local Public Services," Papers 2000:17, Uppsala - Working Paper Series.
    3. Bergström, Pål & Dahlberg, Matz & Johansson, Eva, 1998. "Municipal labour demand," Working Paper Series 1998:1, IFAU - Institute for Evaluation of Labour Market and Education Policy.
    4. Borge, L.E. & Dahleberg, M. & Tovmo, P., 2001. "The Intertemporal Spending Behavior of Local Governments : A Comparative Analysis of the Scandinavian Countries," Papers 2001:10, Uppsala - Working Paper Series.
    5. Daniel S. Hamermesh, 1992. "Spatial and Temporal Aggregation in the Dynamics of Labor Demand," NBER Working Papers 4055, National Bureau of Economic Research, Inc.
    6. Bergstrom, Pal & Dahlberg, Matz & Mork, Eva, 2004. "The effects of grants and wages on municipal labour demand," Labour Economics, Elsevier, vol. 11(3), pages 315-334, June.
    7. Dahlberg, Matz & Mörk, Eva, 2008. "Is There an Election Cycle in Public Employment? Separating Time Effects from Election Year Effects," Discussion Papers 444, VATT Institute for Economic Research.
    8. Antti Moisio, 2001. "On Local Government Spending and Taxation Behaviour - Effect of population size and economic condition," ERSA conference papers ersa01p170, European Regional Science Association.
    9. Albert Solé-Ollé & Elisabet Viladecans-Marsal, 2011. "Local spending and the housing boom," Working Papers 2011/27, Institut d'Economia de Barcelona (IEB).
    10. Goux, Dominique & Maurin, Eric & Pauchet, Marianne, 2001. "Fixed-term contracts and the dynamics of labour demand," European Economic Review, Elsevier, vol. 45(3), pages 533-552, March.
    11. Jung, Sven, 2013. "Employment Adjustment in German Firms," Annual Conference 2013 (Duesseldorf): Competition Policy and Regulation in a Global Economic Order 79696, Verein für Socialpolitik / German Economic Association.
    12. Bergstrom, P. & Dahlberg, M. & Johansson, E., 1998. "Municipal Labour Demand. Sweden 1988-1995," Papers 1998:24, Uppsala - Working Paper Series.
    13. Jung, Sven, 2012. "Employment adjustment in German firms," Discussion Papers 80, Friedrich-Alexander University Erlangen-Nuremberg, Chair of Labour and Regional Economics.
    14. Antti Moisio, 2001. "On Local Government Spending and Taxation Behaviour - effect of population size and economic condition," Discussion Papers 257, Government Institute for Economic Research Finland (VATT).
    15. Matz Dahlberg & Eva Mörk, 2011. "Is There an Election Cycle in Public Employment? Separating Time Effects from Election Year Effects," CESifo Economic Studies, CESifo, vol. 57(3), pages 480-498, September.
    16. Matz Dahlberg & Anders Forslund, 2005. "Direct Displacement Effects of Labour Market Programmes," Scandinavian Journal of Economics, Wiley Blackwell, vol. 107(3), pages 475-494, September.
    17. Dahlberg, Matz & Lindstrom, Tomas, 1998. "Are Local Governments Governed by Forward Looking Decision Makers?: An Investigation of Spending Patterns in Swedish Municipalities," Journal of Urban Economics, Elsevier, vol. 44(2), pages 254-271, September.
    18. Moisio, Antti, 2002. "Essays on Finnish Municipal Finance and Intergovernmental Grants," Research Reports 93, VATT Institute for Economic Research.
    19. Lars-Erik Borge & Per Tovmo, 2009. "Myopic or Constrained by Balanced-Budget Rules? The Intertemporal Spending Behavior of Norwegian Local Governments," FinanzArchiv: Public Finance Analysis, Mohr Siebeck, Tübingen, vol. 65(2), pages 200-219, June.
    20. Daniel S. Hamermesh, 1993. "Labor Demand and the Source of Adjustment Costs," NBER Working Papers 4394, National Bureau of Economic Research, Inc.

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